This past Wednesday, silver investors filed two lawsuits against banking giants JPMorgan and HSBC for conspiring to drive down silver prices and taking in hundreds of millions of dollars in illegal profits.
Specifically, both banks are accused of manipulating COMEX silver futures and options contracts for the first half of 2008. Each bank is accused of amassing an abnormally high amount of short positions in silver future contracts…these types of investments profit when silver prices fall.
Plaintiffs Brian Beatty and Peter Laskaris, who were also buying future contracts in silver, claim they lost money because of the alleged market manipulation. Each of them is seeking a “class-action” status for their lawsuits.
Both lawsuits were filed one day after the Commodity Futures Trading Commission said it would be seeking more authority to deal with those who manipulate prices. They’ve been investigating silver market manipulation since September 2008. Earlier this year, they were looking into allegations by a London trader that JPMorgan was manipulating silver prices.
This isn’t the first time silver prices have been under scrutiny by regulators…the most prominent case is likely dates back to 1980 when the Hunt brothers ran the silver price to over $50 per ounce in an attempt to corner the market…silver prices later plunged.
Silver markets can be quite volatile – since the CFTC began investigating silver price manipulation in 2008, the price has ranged from between $8.42 and $24.90 an ounce. Currently, it’s around $23.70.
We’ll keep on top of any developments in these cases.
